By Anna Wilde Mathews
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 21, 2018).
Berkshire Hathaway Inc., Amazon.com Inc. and JPMorgan Chase
& Co. named prominent surgeon and researcher Atul Gawande as
chief executive of their new venture that aims to overhaul workers'
health care.
The appointment of Dr. Gawande is effective July 9, and the
still-unnamed health-care initiative will be based in Boston, the
companies said.
The selection of Dr. Gawande, a best-selling author known for
his work on health-care quality, ensures the effort will remain
under a spotlight, and provides the most concrete signal so far
that the partners' ambitions go beyond conventional tweaks to
employer health-benefit plans. Dr. Gawande has little background in
the nitty-gritty of health insurance or running a major corporate
operation, but he is well-regarded across the health industry and
has moved his ideas forward through nonprofits he founded.
The leaders of the three partner companies, including Warren
Buffett at Berkshire Hathaway and JPMorgan CEO James Dimon, have
spoken about the need to rein in health-care costs and improve care
using new approaches. "We said at the outset that the degree of
difficulty is high and success is going to require an expert's
knowledge, a beginner's mind, and a long-term orientation," said
Jeff Bezos, founder and CEO of Amazon, in prepared remarks
Wednesday. "Atul embodies all three, and we're starting strong as
we move forward in this challenging and worthwhile endeavor."
Dr. Gawande practices general and endocrine surgery at Brigham
and Women's Hospital in Boston and is a professor at the Harvard
T.H. Chan School of Public Health and Harvard Medical School, as
well as a writer for the New Yorker magazine. He founded Ariadne
Labs and has been executive director of the nonprofit center, which
focuses on efforts to improve care and reduce medical errors, for
six years.
In addition to running the new venture, Dr. Gawande will
continue to practice surgery and keep his position as a professor
at Harvard, as well as retain a role at Ariadne Labs as chairman,
according to Ariadne Labs.
In January, Amazon, Berkshire and JPMorgan announced they teamed
up to figure out how to reduce health-care costs and improve care
for their hundreds of thousands of U.S. employees. The companies
said the entity would operate independently and be free from
profit-making incentives and constraints. Together, Amazon,
Berkshire and JPMorgan have more than one million employees, though
not all of them in the U.S.
The three partners in the joint venture had an in-depth process
to select the new CEO. Todd Combs, an investment officer at
Berkshire and a JPMorgan board member, did initial interviews with
CEO candidates by phone in February, according to people familiar
with the discussions. Candidates later were asked to deliver a
white paper on how they would create a model for the way employers
buy health benefits, what team the CEO would need to execute that
strategy and how the new enterprise would use data analytics, the
people said.
The new model should lower costs and serve as a template for
other employers, but interviewers set few other criteria for the
enterprise, the people said. However, CEO candidate interviews did
focus on the use of data analytics, the cost of prescription drugs
and chronic care management, they said.
Executives from the three companies were interested in Dr.
Gawande based on his experience at Ariadne Labs, as well as his
role as a surgeon witnessing the successes and failures of the
medical system, a person familiar with the matter said. Ariadne
Labs has about 100 employees and about $20 million revenue
projected for fiscal 2018, according to Ariadne Labs. Dr. Gawande
is also chairman of Lifebox, another nonprofit he founded, which
focuses on making surgery safer globally, particularly in
low-income countries.
The son of physicians, Dr. Gawande grew up in Athens, Ohio. Much
of his prominence stems from his New Yorker articles and books,
which have focused on a range of topics including care for those
with very serious illnesses, the complexity of the health-care
system, and practical efforts to improve treatment such as
checklists for physicians. "He is clearly a big thinker," said
Ashish Jha, director of the Harvard Global Health Institute, who
praised his research colleague's ability to identify trends and
patterns in health care and articulate them clearly.
In a 2010 interview with CNBC, Mr. Buffett said that Dr.
Gawande's writing in the New Yorker about health care in Texas was
"absolutely magnificent." He added that his business partner,
Berkshire vice chairman Charlie Munger, mailed Dr. Gawande a check
for $20,000 after reading the article.
Dr. Gawande is still a surprise choice. The decision signals the
partners "are looking at how care is delivered to patients as a
starting point, not the benefits infrastructure," said Jim Winkler,
a senior vice president at consulting firm Aon PLC.
Experts said it would be a steep challenge to build a venture
from scratch to address the broadest challenges in the American
health-care system. Years of efforts by employers and others have
had only limited impact. "The proof will be in the pudding to see
if it works," said Tom Giella, chairman of the health-care services
practice at recruiting firm Korn Ferry International. "He'd have to
build a team around the things he doesn't know as well, like
operations."
Peter Costa, an analyst with Wells Fargo, wrote in a research
note that the selection signals that the new health-care venture
will aim for "more advanced, further-reaching goals than we believe
a health care industry veteran would likely seek." The upshot, he
suggested, might be "bigger headlines, but an even longer time
frame for any real changes to result from this venture in our
view."
Brian Marcotte, CEO of the National Business Group on Health,
said employers will be closely watching and likely eager to work
with Dr. Gawande. "Employers welcome disruption," he said. They are
"anxious to see where it's going to go."
--Emily Glazer, Melanie Evans, Aisha Al-Muslim and Nicole
Friedman contributed to this article.
Write to Anna Wilde Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
June 21, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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